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2 in 5 U.S. credit card holders have topped out their spending limit, report finds
Inflation may be cooling, but when it comes to credit card debt more than a third of cardholders are finding themselves in hot water.
Roughly 2 in 5 credit cardholders, or 37%, have either maxed out a credit card or come close to doing so since the Federal Reserve began hiking interest rates in March 2022, according to a new online survey of 3,576 U.S. adults by personal finance firm Bankrate.
Lower-income earners, older people and families those with children under the age of 18 are more likely to say they’ve reached their credit spending limit since the central bank started raising its benchmark rate, the survey found. Of those respondents, 54% point to inflation as the main reason why they’ve tapped out a card, while 38% cite emergency expenses, 25% cite job or income loss, and 22% point to medical costs.
Credit card debt has risen to alarming heights since 2022, as soaring costs in food, housing and auto rates have resulted in many Americans becoming more reliant on plastic simply to make ends meet. Nationwide, consumers collectively owed $1.1 trillion in credit card debt as of the second quarter of 2024, up $27 billion from the previous quarter.
“Inflation does not care if you are rich or poor. Everyone can feel its wrath,” Bankrate analyst Sarah Foster said in the report, published Thursday. “With limited options to absorb those higher costs, many low-income Americans have had no choice but to take on debt to afford costlier essentials — at a time when credit card rates are near record highs,”
Exorbitant APRs
Credit card annual percentage rates surged as the Fed jacked up interest rates in order to quash inflation, making delinquency extremely costly for cardholders. The average APR is now a whopping 24.72%, according to Lending Tree.
And though the Fed recently lowered its benchmark rate by 0.50 percentage points, the impact of the cut on APRs “will probably only save the average credit card debtor a couple of dollars per month off their bill,” LendingTree credit analyst Matt Schulz told CBS MoneyWatch in September.
Consumers who have topped out their credit cards over the last two years are more likely to fall into delinquency, Bankrate found. More than half of such cardholders, or 59%, said they have missed at least one monthly payment on a bill since the beginning of 2024. Credit cards were the most common monthly expense that went unpaid, at 35%, according to the survey.
Credit card delinquencies have soared more than 50% in the past year, according to an August report from the Federal Reserve Bank of New York. About 6.4% of all accounts are now 90 days past due, up from 4% at the end of 2022.
“Being maxed out doesn’t just have ramifications for someone’s personal finances, but it can be a headwind for the economy, too,” said Foster, adding that Americans could find themselves tapped out of credit ahead of the holiday shopping season. “If Americans have already been struggling to keep up with their bills, rising unemployment and weaker job growth could make that picture even worse.”
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Gold investing has long been a smart way to protect your money. And, in recent years, it’s become an essential one.
With inflation high and interest rates elevated, many turned to gold to protect their portfolio as other assets appeared uneven. Investing in the precious metal subsequently hit an 11-year high in 2023. However, the interest has remained strong throughout 2024, as evidenced by numerous price records shattered. Gold was priced at $2,063.73 per ounce on January 1 but has since soared past $2,600 – with many expecting that price to soon hit $3,000.
Against this backdrop, both beginner investors and veterans who have yet to add gold to their portfolio may want to get started now. But they should do so before this November, in particular. Below, we’ll explain why.
Start exploring your top gold investment options here.
Why you should invest in gold before November
With the start of the new month just weeks away, it makes sense to get invested in gold now. Here’s why:
Geopolitical tensions could increase buyer demand
Gold demand typically increases when geopolitical tensions are high, as they have been for much of the last two years. If you combine those concerns with a looming U.S. presidential election and the fallout from that, it adds up to what is likely to be increased buyer interest. This has already been demonstrated, in part, with gold bars selling out at retailers like Costco. So you’ll want to get invested before more buyers enter a competitive market. Just be sure to do so in a moderate amount as most experts recommend limiting gold to a maximum of 10% of your overall portfolio.
Get started with gold online today.
The price could rise again
Amid the aforementioned concerns and economic factors like inflation and interest rates, it’s easy to see the price of gold rising yet again. And with it already approaching $2,700, waiting too long to act could cause the precious metal to become out of reach for many. Buying in now, then, before November makes sense. While gold could come down in price slightly post-purchase it’s important to remember that, overall, the price of gold only rises. So act now before that rise makes an investment prohibitive.
It’s never too early to protect your portfolio
Gold is a great portfolio diversifier, offering protection and steadiness when other assets are volatile. And it’s never too early to add that protection into your asset mix. By maintaining and often rising in value when other assets underperform, gold can offer a buffer that stocks, bonds and even real estate simply cannot. And while recent economic developments surrounding rate cuts, unemployment and inflation have all been encouraging, it will still take some time for this news to reverberate through the wider economic climate. You’ll want to have gold as a protector when it does.
The bottom line
Now is a great time to invest in gold if you haven’t already taken advantage of the precious metal. By investing before this November you’ll position your money for protection against the volatility caused by geopolitical and domestic tensions. But you’ll also get in before the price has a chance to rise yet again. And remember that, no matter the timing, it’s never premature to protect your portfolio. Gold can help provide that security both now and in the months and years to come.
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